2020 (2) TMI 335 - HC - Income Tax

Condonation of delay in fling of the related appeal u/s 254 - appeal filed by the appellant against the order passed by the jurisdictional administrative Commissioner under Section 263 - HELD THAT - Tribunal did not accept the contention of the appellant that it was under a bonafide belief that since it had fled appeal against the consequential order of assessment as affirmed by the first appellate authority, its interest would be protected and therefore there was no need to independently challenge the order under Section 263. We feel that when Tribunal had entertained the appeal arising out of the consequential assessment, it was not justified on the part of the Tribunal to have rejected the appeal filed by the appellant against the order passed by the jurisdictional administrative Commissioner under Section 263 of the Act because that was the very foundation of the subsequent assessment proceedings. It would be in the interest of justice, if the delay in fling is condoned and the said appeal is heard on merit by the Tribunal.

Summary

Issues involved:
Non-condonation of delay in filing the appeal under Section 254 of the Income Tax Act, 1961 by the appellant before the Tribunal.

Analysis:

1. Issue of Non-Condonation of Delay:
The appellant filed an appeal under Section 260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal for the Assessment Year 2008-09. The appeal raised substantial questions of law regarding the rejection of the appeal by the Tribunal and the alleged perversity of the Tribunal's order. The primary issue was the non-condonation of delay in filing the related appeal under Section 254 of the Act before the Tribunal. The delay in filing the appeal was 450 days due to the appellant realizing late that the order passed by the jurisdictional administrative Commissioner under Section 263 of the Act had remained unchallenged.

2. Tribunal's Decision and High Court's Analysis:
The Tribunal dismissed the appeal as time-barred, as it did not condone the delay in filing the appeal. However, upon review, the High Court found that the Tribunal had erred in not accepting the appellant's contention that it believed its interests were protected by filing an appeal against the consequential assessment order, hence did not independently challenge the order under Section 263. The High Court opined that since the Tribunal had entertained the appeal arising from the consequential assessment, it was unjust to reject the appeal against the order under Section 263, which formed the foundation of the subsequent assessment proceedings.

3. High Court's Decision and Conclusion:
In the interest of justice, the High Court decided to condone the delay in filing the appeal and remand the matter back to the Tribunal for hearing the appeal on merit. The High Court set aside the Tribunal's order and answered the substantial questions of law in favor of the assessee and against the revenue. Additionally, the appellant was directed to pay a cost of ?25,000 to the Maharashtra State Legal Services Authority for the rehearing of the Income Tax Appeal. Consequently, the appeal was allowed, and the matter was to be reconsidered by the Tribunal.

In conclusion, the High Court's judgment focused on the non-condonation of delay in filing the appeal and emphasized the importance of ensuring justice and fair hearing of the case. The decision highlighted the need to consider all relevant factors and circumstances while addressing procedural matters to uphold the principles of natural justice and legal rights.